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The rise of Alternative Protein Industry Clusters
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Traditional food and many other companies are getting in on the action

Traditional food companies are participating in alternative protein – which we see as further validation of the sector's arrival.

Companies like Tyson Foods, Nestle, Cargill, Kellogg's, General Mills, and Perdue Farms have launched their own plant-based products.

Tyson, Cargill and PHW Group have all invested in plant-based and cellular-agriculture startups.

Plant-based meat offerings have appeared on the menus of Burger King, KFC, Tim Hortons, IKEA, and Mcdonald's – often to great consumer acclaim.

The ex-CEO of Tyson Foods best summed up the willingness of traditional food companies to embrace alternative protein with this statement in support of cultivated meat: "If we can grow the meat without the animal, why wouldn't we?".

Several traditional animal protein companies also renamed themselves as protein companies.

Next to traditional food companies, biotech, chemical, technology, retail, ingredient, and other companies also recognize the potential to enter the alternative protein market and/or to move up or down the value chain.

The plant-based version of IKEA's famous meatballs. Copyright: Ikea

We have seen patterns emerge through our interactions with traditional food companies such as ADM, Cargill, Tyson, Nestle, and Kellogg.

Incumbents are:

  • aware of alternative protein as an opportunity to add additional SKUs to their product line and generate more revenue
  • worried about losing touch with young consumers and want to keep close to the alt-protein trends
  • concerned with brand risk related to environmental damage, pollution, unhealthy foods, or poor animal ethics
  • looking to keep closely abreast of emerging food technologies (such as cultivated meat or plant-based meat), both because they are concerned about disruption and staying relevant, but also because they see the potential for technology to enhance their current product offerings
  • looking for technologies that they can use to enhance/optimize their existing business processes
  • looking to move upstream to ensure supply chain stability
  • concerned with managing pandemic-related risks

As a result, companies like Tyson, Cargill, Perdue Farms, and others are actively looking to participate in the rise of alternative protein.

2020 analysis from the accelerator and venture capital firm Brinc suggests that, among the top 100 food and beverage companies, around 49% are enhancing their alternative protein capabilities or launching their brands.

Also, about 55% are operating and partnering with accelerators, and around 50% are investing in or acquiring startups that are more technology-driven as a means of keeping current with state-of-the-art.

However, traditional food companies must maintain ground to biotech, chemical, technology, retail, ingredient, and other companies bringing in a different set of core competencies and increasingly recognizing the opportunity to expand their business in new markets.

In interviews, alternative protein experts often draw a comparison to the tech industry and also the related M&A activities known in that industry:

"In the future you'll see big food companies acquire startup alt-protein brands once they hit reasonable levels of revenue. You'll see big food companies buying food-tech startups at a much earlier stage in their evolution. General Mills just wrote a significant cheque for a plant-based seafood company. This starts to feel a little bit like pharmaceutical companies buying startup biotech companies early. Incumbents can no longer wait until the acquirees are big enough. If the big food companies don't buy the startups early, they will be stuck trying to spend on marketing to unseat those startups later. My advice to big food companies is to be aggressive in partnering with startups, and to be less like their old selves and more like their aspirant brands. Even Tyson has realized that their brand has both great value but also baggage. They can't just slap a Tyson brand on a bag of plant-based protein and expect it to do well. Take a look at your biggest threat – be it Beyond, Impossible, etc. Some of the incumbents – those who have a portfolio approach and are more nimble and adaptable – will be able to weather this disruption better than other incumbent companies. If you're a Kraft and Tyson, and you run your own plants, and you convert 10 of those plants to plant-based alternatives, you'll do very well."

Quote from Tom Mastrobuoni, former CFO of Tyson Ventures and now Chief Investment Officer at Big Idea Ventures

For various reasons, we can see that more traditional food companies, biotech firms, and technology startups are entering the alternative proteins market.

For example, many traditional food companies are looking to enter this market to stay competitive and appeal to millennials, who are increasingly interested in animal alternatives.

If you want to learn more about how large corporations typically enter this market, read the next chapter of this 5-part series. In it, we will explore seven different strategies that these companies use and discuss the benefits and challenges of each approach.

The Boom of the Alternative Protein Sector: 7 Growth Strategies for corporations
Corporates and investors have a range of options to enter and grow in the alternative protein sector. In this article you’ll find seven growth strategies that are working well today.
M&A as the predominant way to enter the alternative protein sector
Traditional food companies are turning to acquisitions as a way to enter the alternative protein market. Here's how they do it.
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